Global Business - Investment Structures

CROSS BORDER EQUITY AND DEBT INVESTMENT STRUCTURES INTO INDIA AND AFRICA

At ~US$600 million, the cross-border investments sector represents 60% of the IFC’s value add stemming from professional services and fund administration. Over 20,000 global business companies have been registered in Mauritius. This trend is expected to continue and focus is targeted to shift towards Africa cross-border investments.

The Mauritius IFC’s value propositions lie in three FSC’s licenses as below.

The Global Business License Company
Closed Ended Funds and functionaries licenses and
Collective Investment Schemes and functionaries licenses

CROSS BORDER EQUITY AND DEBT INVESTMENT STRUCTURES

Regulator:

The Financial Services Commission of Mauritius.

Enabling laws:

Section 71(3) of the Financial Services Act.

Principal objectives:

To perform the core income generating activities of cross-border investments in or from Mauritius by non-citizen shareholders.

Key licensing criteria:

Management & Control:
Control and management of the Global Business License (GBL) Company must be from Mauritius. The GBL company shall comply with below schedule.

Provide for at least 2 directors, resident in Mauritius, who are appropriately qualified and are of sufficient calibre to exercise independence of mind and judgement;
Maintain all times its principal bank account in Mauritius;
Maintain at all times its accounting records at its registered office in Mauritius;
Prepare its statutory financial statements and causes or proposes to have such financial statements to be audited in Mauritius;
Provide or provides for meetings of directors to include at least two directors from Mauritius (GBLs are encouraged to hold physical meetings in Mauritius); and

Economic Substance

The GBL company shall fulfill at least one of the following criteria:

To have office premises in Mauritius;
To employ on a full time basis at administrative / technical level, at least one person who shall be resident in Mauritius; or

Cause the constitution to contain a valid clause whereby all disputes arising out of the constitution shall be resolved by way of arbitration in Mauritius; or
To hold within the next 12 months, assets (excluding cash held in bank account or shares / interests in another GBc1) which are worth at least USD 100,000 in Mauritius; or
To cause the GBL Company’s shares are listed on a securities exchange licensed by the FSC; or
To have a yearly expenditure in Mauritius which can be reasonably expected from any similar corporation which is controlled and managed from Mauritius.

Guidance by the FSC with regards to core income generating activities, minimum annual expenditure and minimum employment

Pursuant to section 71 (3)(a) of the Financial Services Act, a holder of a Global Business License (“GBC”) shall, at all times carry out its core income generating activities in, or from, Mauritius by –
- employing, either directly or indirectly, a reasonable number of suitably qualified persons to carry out the core activities; and
- having a minimum level of expenditure, which is proportionate to its level of activities.

When assessing the substance requirements mentioned in paragraph 2, the FSC will consider the nature and level of core income generating activities conducted (including the use of technology) by the GBC.
To meet the above requirements, a person employed either directly or indirectly (e.g. employment by a Management Company) should be suitably qualified to conduct the core income generating activities of the GBC.
When determining what is intended by “ a reasonable number of suitably qualified persons” and “ a minimum expenditure which is proportionate to its level of activities”, the FSC will make the assessment on a case by case basis and will look at the specific circumstances of each GBC. In doing so, the FSC will refer to the indicative guidelines as set out in the following table:

Category	Sub-Category	Minimum Annual Expenditure (US$)	Minimum Employment in Mauritius (Direct or Indirect) [A person employed by a management company should qualify for direct employment]
Non-Financial	Investment Holding (Non-IP rights) GBCs holding IP Rights will be required to demonstrate that they have incurred expenditure in Mauritius which is proportionate to the research and development of the relevant IP Rights.]	12,000	No minimum employment specified.
	Non-Investment Holding	15,000	Annual turnover (US$)	Minimum No.
			Less than 100M	1
			More than 100M	2
Financial	CIS Manager / Asset Manager	30,000	Assets under management (US$)	Minimum No.
			Less than 100M	1
			Between 100M and 500M	2
			More than 500M	3
	Institutions [e.g. insurance, leasing, credit finance]	100,000	Annual Turnover (US$)	Minimum No.
			Less than 50M	1
			Between 50M and 100M	2
			More than 100M	3
			For Insurers
			Annual Gross Premium (US$)	Minimum No.
			Less than 50M	1
			Between 50M and 100M	2
			More than 100M	3
	Intermediaries	30,000	1
	Others [e.g. investment adviser, insurance agent, insurance broker]	25,000	1

Taxation

A partial exemption regime applies whereby 80% of specified income will be exempted from income tax. The exemption will be granted to all companies in Mauritius, except banks, and shall apply to the following income: –

Foreign source dividend, provided the dividend has not been allowed as a deduction in the source country and the company satisfies the conditions relating to the substance of its activities as prescribed;
Foreign source interest, provided the company satisfies the conditions relating to the substance of its activities as prescribed;
Profit attributable to a permanent establishment which a resident company has in a foreign country;
Overseas income derived by a collective investment scheme (CIS), closed end fund, CIS manager, CIS administrator, investment adviser or asset manager, provided the company satisfies the conditions relating to the substance of its activities as prescribed; and
Overseas income derived by a company engaged in ship and aircraft leasing provided the company satisfies such conditions as may be prescribed relating to the substance of its activities.

No credit shall be allowed on foreign source income where the 80% exemption has been claimed.

The definition of foreign source income shall be changed to “income which is not derived from Mauritius”.

Stated capital: No minimum stated capital.
Shareholders: 100% foreign shareholders allowed.
Directors: At least 2 resident directors required.
Audited Financial Statements and Annual Tax Returns: To be filed annually.
FATCA and or CRS compliance: Will be required.
Business with residents of Mauritius: Allowed.
Compliance with National Code of Corporate Governance 2018: Yes if financial services are offered.
Immovable Property acquisition in Mauritius: Permissible subject to conditions.
Insolvency Act provisions for winding up.

Global Business - Investment Structures - Bhumishq